UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15700 / April 8, 1998
SECURITIES AND EXCHANGE COMMISSION v. INTERACTIVE PRODUCTS AND
SERVICES, INC., AND MATTHEW P. BOWIN, United States District
Court for the Northern District of California, Civil Action No.
C-98-20313.
The Securities and Exchange Commission (the "Commission")
announced that it filed a complaint today in the United States
District Court for the Northern District of California alleging a
phony public offering of stock conducted over the Internet. The
suit names as defendants Interactive Products and Services, Inc.
("IPS"), a purported high-tech start-up company based in Santa
Cruz County, California, and Matthew P. Bowin ("Bowin"), the
company's chairman, president, and chief executive officer.
The stock offering, one of the first conducted entirely over the
Internet, raised approximately $190,000 from about 150 investors
nationwide between November 1996 and July 1997.
In the offering materials, Bowin and IPS represented that all
offering proceeds would be held in escrow, and would be returned
to investors if a minimum investment level of $500,000 were not
reached by the close of the offering. Instead, the Commission
alleges, Bowin simply pocketed the offering proceeds and
converted the money to personal use (buying items from groceries
to clothing to stereo equipment). The Commission further charges
that, despite the failure of the offering to raise the $500,000
minimum, Bowin refused to return the money to investors; to the
contrary, Bowin misrepresented to certain investors that the
offering was successful and that they would be receiving stock
certificates shortly.
In addition, the Commission alleges that Bowin and IPS made other
misrepresentations and omissions in connection with the offering,
including the following: (1) failed to disclose that IPS was
insolvent due to numerous outstanding judgments; (2) touted the
qualifications of three "advisors" retained by the company who,
in fact, had no affiliation with IPS; (3) made optimistic
statements about a pending patent application while failing to
disclose that the application had been repeatedly rejected; and
(4) misrepresented that an offering statement relating to the
securities had been qualified by the Commission.
The Commission's complaint charges that Bowin and IPS have
violated the antifraud provisions of the federal securities
laws - Sections 17(a) of the Securities Act of 1933 and Section
10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and
10b-9 thereunder.
Investors are advised to read the SEC's "Cyberspace" Alert before
purchasing any investment promoted on the Internet. The free
publication, which alerts investors to the telltale signs of
online investment fraud, is available on the Investor Assistance
and Complaints link of the SEC's Home Page on the World Wide Web
. It can also be obtained by calling 800-SEC-0330.
Investors are encouraged to report suspicious Internet offerings
(or other suspicious offerings) via e-mail to
. A user-friendly form to assist you in
making a report is available at the Enforcement Complaint Center
on the Enforcement Division link of the SEC Home Page. Investors
can also mail a report to the SEC's Enforcement Complaint Center,
Mail Stop 8-4, 450 Fifth Street, Washington, D.C. 20549.